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Downsizing retail: Can brands benefit from reducing the size of their stores?

category:
Trends

sectors:
Retail

We saw countless closures of big-box retailers throughout 2018, but increasingly we’re assured that this is not the end of physical retail. So, what do these closures mean?

Retail patterns are shifting, e-commerce behaviors are being applied to bricks and mortar spaces and forward-thinking brands are striving to blur the line between online and offline. This consolidation of processes opens up opportunities for a new and totally seamless customer journey in real-world retail.

Consumers often begin their journey online but want to finish it offline. Online research fuels their offline purchases, which often means when customers enter a store they know exactly what they’re looking for. This shift in consumer behavior means store spaces needn’t be the biggest shop on the block. They need to be connected to their e-commerce platform, have great customer service and offer perks like click-and-collect and the ability to order in-store straight to their home. These experience-based qualities attract and excite shoppers of today.

Smart about space

Technological advances mean smaller spaces can really pack-a-punch. The size of a store in square meters is inferior to the technological backend of a businesses. Similar to a showroom, smaller spaces are great for online pick-up, returns, one-on-one customer service and showcasing products.

Laptops are the thinnest they’ve ever been whilst having more storage and faster processers than ever before; the same rules apply for retail spaces. Improvements in the supply chain mean retailers can fulfil orders smoothly and efficiently meaning less physical space is needed in the storefront.

Getting smaller to grow bigger

A smaller store allows retailers to maintain their spot on the high street whilst delivering a more personalized service. Well-established brands like Nordstrom are downsizing to trial the smaller format and throughout 2019 we can expect to see retailers moving away from flagship stores. These spaces cost less and more versatile, making them easier to mold based on user feedback. This allows brands to experiment with fun experiences and pop-up style attractions.

Image courtesy of Our House Studio

With soaring rent prices and competition running high, small shops allow brands to focus on location rather than size. This gives them the opportunity to choose a premium space known for attracting large quantities of footfall, without breaking the bank.

The influence of pop-ups

Pop-up shops and showrooms have been gathering momentum over the past year and are now a popular addition to the retail sector. This means consumers are used to exploring smaller spaces and associate them with in-trend, independently run businesses. Attitudes towards big stores have changed, it takes more to impress and less to let down, meaning customers won’t be put off by a shop being small. In fact, it could entice them in.

Lower rent prices, more opportunity to test and implement new technologies, pop-up style attractions and qualities such as click and collect, highlight the attraction of downsizing retail. With substantially less risk, we can expect to wave goodbye to unnecessarily big stores and welcome in smaller, more efficient ones.